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Monday, September 20, 2010

Will a ban on outsourcing Save US from recession?

The Obama Administration in USA has slapped service tax on companies which are outsourcing to other countries ( mostly to India ), in order to bring jobs back to USA and to improve the business conditions in USA. The Indian Software and BPOs are likely to suffer in the future, if the US companies stop outsourcing from India.
Will this act stop US from going into recession? If this is the question, then the answer would be good ‘NO’. The Global Economies suffered a setback in 2008 because of the crash in the stock Markets world over. The stock Market Crash has jolted the US and European Economies in particular.
Ever since the crash, the Asian and South American Economies improved and their Stock Markets rallied to their 2008 levels. But the US and European Economies seen little improvement and their Stock Markets rallied but not to the level which it was seen in 2008 January.
Since Stock Markets in these countries never rallied much, the liquidity, business confidence, job conditions have not improved. This percolates into their Economies which in turn is looking weak right now. Banning Outsourcing by the US companies in no way going to improve their economy.
Actually, it is likely to impact badly their economies in the Future. The performance of the US Companies depends upon the cost cutting measures they are taking. Stopping outsourcing will surely increase the working cost and it will be reflected in their bottom line. A weak performance of these companies will further dampen the US Economy.